Wednesday February 17, 2010
This article is from Talent Management Review, Winter 2009/10.
Fred Story, founder of Story Construction finds that communicating with your employees is the key to improving business.
A loss of confidence and sense of nervousness amongst employers in the construction industry has meant many businesses cutting back on spending and the Government putting numerous regeneration projects on hold. As a result, major challenges have been created for those in this industry and as the sheer volume of work has dramatically reduced the working environment has naturally become much more competitive.
Construction is a huge sector which, according to the DTI, employs 7% of the UK's workforce. In 2006, it provided 2.2 million jobs and whilst jobs have been lost due to the economic downturn, that figure is expected to increase to over 2.8 million by 2011¹. The sector therefore faces the challenge of coping with the downturn whilst preparing to up-skill and increase the workforce in the future.
At Story Construction, profits were down by £3 million last year which really brought home to me that something was going fundamentally wrong which needed to be tackled. As founder and chief executive, I concluded that in order to improve productivity and profitability I needed to do more to engage and develop my people and therefore decided to invest in the web-enabled talent management tool, Talent Toolbox, from people transformation experts Learnpurple. By being able to harness all of my important people data and open up two way communications, I found it was possible to empower my workforce to drive their own progression.
The talent management tool was designed to transform our annual appraisal, a process which was in place but very inconsistent, and generate very robust information. The existing appraisal process consisted of some managers having meetings and some not conducting any at all. From those appraisals which had been completed, often there was no formal collation of the data and therefore these important checkpoints were sometimes portrayed as not meaning much at all, from which nothing could be learnt or changed. By introducing Talent Toolbox, I was able to create a consistent system which helped me assess engagement levels, find out what employees really thought and felt through their feedback as well as monitor and manage performance and development areas.
After completing the appraisals we found that whilst the economic downturn was partly to blame for the reduction in profits, too much of it was down to lack of effectiveness in the business. No-one was taking ownership for the jobs that were going wrong or losing the business money and structurally there was no real need for them to. Every one in five jobs completed was deemed to be a 'bad job'. These jobs ended up costing us as much as we were making on the good ones and with managers not being measured against these poorly executed jobs they didn't worry themselves with taking ownership.
It was clear from the appraisals that many of the underlying problems boiled down to issues with communication. Feedback showed that the people delivering on the ground didnâ€™t believe in the decisions being made by those at the top. This was either because they didn't understand them or because some of the decisions that made in practice were not the right ones. Whilst lots of thought was put into the decisions, and those carrying out the delivery were being considered, on reflection we realised it was essential to involve the people who would be doing the delivery in the decision making process.
The work we have done on talent management has also helped me refocus and identify structurally where business improvements could be made. Implementing regular formal appraisals and a system for staff to feedback on an ongoing basis has helped create an environment which enables more discussions. People have really opened up and appreciate the freedom and encouragement to talk about real issues, giving their honest views. And it's not just managers providing feedback on what they need from staff, but staff saying what they need from their managers. By creating a consistent two-way communication channel, my employees now feel that they have been a part of any decisions which have been made.
A big change for the managers through the new appraisal process was that they would now be measured against their results. However I knew from my experience in this industry that this change would still not be enough to make them want to take ownership of their jobs, and so I started to think more strategically about a restructure of the whole business so that they felt a personal interest in the business again.
Many CEOs, as I did, would like to get a better handle on who they employ; how competent they are; what potential they have; how likely they are to stay; how engaged they are; what their aspirations are; what they think and feel. Our talent management system helped us find the answers to these questions and once we had access to this wealth of business critical data, I was able to establish where business improvements could be made. Some of the key areas included communication, role and responsibility levels and so I tackled these issues head on and restructured the organisation.
To begin with, we gave a 20 per cent profit share is to each individual unit meaning that they are now responsible for running their area as if it were their own business. The team in head office and I no longer make the vast majority of decisions, instead we provide support and advice to the business units so they can make their own choices. We continue to use Talent Toolbox to help us identify overall training needs, individual training needs, and allow people to manage their own career progression meaning that the investment we make in development is very accurately targeted and therefore produces a great return for us.
This has been quite a change for myself, management, head office and all the staff at each unit. Managing the change process has been challenging, but by communicating everything to everyone throughout the company in an open and honest way has helped me smooth things over. People know that ultimately by engaging with this process it will be in their best interest so they have bought into it quickly.
I believe that everyone can run a business if they want to, but this requires risk which is something many people do not want or are not willing to take especially in the current economic climate. By restructuring as we have done, we are providing individuals with the partial experience of running their own business, in terms of the decision-making and profits, but also providing them with job security. Because of this I am confident we will attract a different kind of individual to our company, someone with entrepreneurial flair and an achievement focused motivation.
Whilst it is still early days, empowering the individual business units is already having a real impact on the business. And it's not just the profit or monetary reward that is driving employees. Real motivation comes from the fact that they are now in control of their own destiny and know that they can make a difference to the business.
We are also seeing a much higher level of morale now, which I can again track on an ongoing basis via our talent management tool. Despite the economic climate this is now higher than when times were good and I put this down to the improved communication and working structures. It comes back to our employees feeling and knowing that they have meaning and purpose at work.
In order for someone to be completely engaged at work, they need to feel valued and happy but also need to be contributing to their maximum ability. Again, with better communication channels in place, like regular reviews and helping people to feel empowered to make choices, there is a far greater sense of engagement.
The recession has been somewhat of a rallying point for Story Construction, the threat to the business has seen people bond and helped trigger changes in both the company and individuals; with individuals showing less complacency and more willingness to pull together to make a successful business.
I am honestly as excited now as I was when I first started out in the business 22 years ago and am optimistic about the future, with our profits forecasted to increase in the region of 70 per cent next year despite the downturn. I also believe there are fantastic opportunities out there, both in terms of buying well-priced land but also attracting top talent into the business. I'm sure that people looking for employment in our sector will be more likely to come to a business like ours who place its people at the top of the agenda. I feel we are ahead of the game now and envisage that our efforts over the past year will make us an 'employer of choice', something that's really going to help us when those green shoots of recovery really do start growing.
¹ (Blueprint for Construction Skills 2007-2011)